carbon trading | ukwatch.net

Carbon Trade-off

JamieSW — Tue, 05 Aug 2008 13:07:06 +0000

There’s a global gold rush taking place, with a stampede of investment galloping towards the various forms of carbon trading and offsetting that have been rolled out to supposedly deliver global emissions reductions in the most cost-effective way. Advocates of the booming carbon market say that, in today’s world, it’s green, not greed, that’s good.

In Asia, the biggest involvement in the carbon market has been through the Clean Development Mechanism (CDM). This is a regulated market under the Kyoto Protocol by which countries and companies in the developed world can meet their emissions reduction targets by buying carbon credits that have been generated through projects that bring about reduced or avoided emissions in developing countries. In 2007 this market was worth US$17.5 billion, an enormous 200 per cent increase in market value since 2006. Asia has so far been the global leader in generating CDM credits – in 2007, China alone provided an enormous 62 per cent of the credits on the market, while Indonesia was responsible for 10 per cent and India 5 per cent.

Increasing numbers of critics are challenging the rosy win-win portrait of the CDM market that has been painted. Some commentators in the countries in which the projects are being undertaken, have seen it as creating a new colonial commodity in which the ability to make cheaper reductions in the developing world is being treated as a new resource to be extracted and profitably used for the benefit of Western countries.

Aside from this more politicised perspective of the market, the CDM appears to be failing by the standards it has set itself, with many people asking what happened to the “D” in CDM? The market has been draped in benevolent rhetoric of sustainable development, so that projects are only supposed to qualify for carbon financing if they have some sort of development benefits. In practice, host governments need only rubber stamp their approval to this condition, and genuine developmental benefits on the ground have proven to be elusive to the point of non-existence. An article in the September 2007 academic journal, Climatic Change, stated that, “Close to 200 studies on the CDM have been carried out since its birth in 1997… The main finding... is that, left to market forces, the CDM does not significantly contribute to sustainable development.”

Critics of the CDM have pointed out that, not only do the projects not contribute to development, but, in many cases, the recipients of the money are large, polluting industries that are responsible for all kinds of adverse environmental impacts to the communities who have to endure them. Many thousands of residents of the state of Chhattisgarh, India, have mobilised against the expansion of Jindal Steel and Power Limited’s notoriously polluting sponge-iron factories. Yet the biggest of these factories in the world, which is currently threatening to wipe out three neighbouring villages in a proposed expansion, is currently earning enormous amounts of money and some degree of environmental credibility for having four separate CDM projects on the go.

CDM money is also being used to support the palm oil biofuel industry in Indonesia, which has recently been the subject of a great deal of global concern over its social and environmental impact. In Riau, Indonesia, PT Murini Samsam, a wholly owned subsidiary of the Wilmar Group, received US$8 million in DM funding to expand its crude palm oil refinery.

Leaving aside the issues of sustainable development and the impact on communities, the question that needs to be asked is if the CDM is genuinely providing climatic benefits. One of the thorniest problems with this is “additionality.” The carbon financing through the CDM is supposed to provide emissions reductions above and beyond what would have happened if the money hadn’t been available – i.e in addition to business as usual. If this is not the case and a project that was going to happen anyway is used to justify emissions elsewhere, it can result in a net increase in atmospheric carbon.

Despite the regulatory procedure that is supposed stringently to guarantee that emissions reductions under the CDM are all additional, the market seems to be riddled with examples to the contrary. An adviser to the executive board of the CDM in 2006 conducted an investigation into CDM projects in India and concluded that one third of them were non-additional.

China is home to the lion’s share of hydro-electricity projects registered under the CDM – at the end of 2007, 402 of the 654 hydropower projects in the CDM pipeline were to be found in China, generating 71 per cent of the global annual carbon credits expected from this project category. Given that the Chinese government has been promoting such hydropower development for many years, there are grounds for being suspicious that these projects were happening anyway, and that the government had simply applied for additional funding through the carbon market. The pressure group International Rivers conducted a study that showed that the rate of construction of new hydropower projects in China has been constant for some time. The fact that there has been no significant increase since such carbon financing became available strongly suggests that these projects are simply generating hot air.

Commentators are starting to draw attention to the parallels between the recent sub-prime mortgage credit crunch and the carbon market. In both financial spheres, there is enormous pressure to push through large numbers of transactions regardless of the quality of the deals being done. The UN body administering the CDM has admitted that there is “a clear and perceived risk of collusion” between the project developers and the private, third-party auditors, who are supposed to be verifying the quality of the credits. If in five or 10 years’ time, it becomes even more widely apparent that the majority of CDM credits that have been profitably generated and sold were based on dubious methodologies or even outright deceit, then the impact could be even more catastrophic than the recent financial instabilities caused by the credit crunch. And unlike the global credit crisis, no injection of capital will be able to turn the clock back on an ever-decreasing window of opportunity to meaningfully address the climate crisis.

Trading away the Planet for Profits

Ellie Keen — Sun, 27 Jul 2008 00:00:00 +0000

Climate Culprits

During the climate talks in Bali last December, NASA scientist James Hansen presented new data showing that serious climate change impacts are already happening more rapidly and at lower global ttemperature rises than previously projected, indicating that the atmosphere is more “sensitive” to greenhouse gases than previously assumed. (1)

Based on this more rapid pace of change, eight million squares kilometres of ice sheet at the North Pole – an area as large as Australia – is likely to be entirely lost during the summer within five years. This may trigger the melting of the Greenland ice-sheet whose total disintegration would raise sea levels by seven metres. Hansen stated that we need to move towards a post-fossil fuel clean energy system and cool the planet.

Unfortunately, these dire warnings are not being met by action by the G8 nations, which represent just 13 per cent of the world’s population but are responsible for 45 per cent of the world’s greenhouse gas emissions.

These industrialised countries have caused this crisis while benefiting economically and accruing a climate debt to the South.(2) Yet they are continuing to push unfair free trade and reliance on carbon trade initiatives which could accelerate climate change and further exacerbate developing countries’ vulnerability to its impacts.

Those least responsible for creating the current crisis such as Indigenous Peoples, peasant farmers and fisher peoples will be hit hardest by climate change and also these dangerous, corporate-driven initiatives which are being perversely branded as climate solutions.

To illustrate: Indigenous Peoples and forest-dwelling communities are among the first to face the direct consequences of climate change, owing to their dependence upon, and close relationship with the environment and its resources. Of the 350 million Indigenous People in the world, half live in tropical rainforests, which are known to harbour 80 per cent of our planet's biological diversity. (3) Most of these rainforests are the traditional territories of Indigenous Peoples.

Both the United Nations Declarations on Right to Development (4) and the Declaration of Rights of Indigenous Peoples (5) assert Indigenous Peoples’ sovereignty over their natural resources. However, Indigenous Peoples continue to be marginalised in international decision-making processes including the United Nations Framework Convention on Climate Change (UNFCCC). (6) UNFCCC negotiations are now taking place on ways to reduce emissions of deforestation in developing countries (REDD) that will have direct impacts on the lives of millions of Indigenous Peoples.

Member Parties nations that have ratified the UNFCCC have agreed that they will conserve and enhance forests, and also provide financial assistance to developing countries to achieve these obligations.(7)

However, the UN definition of forests includes plantations and this poses major concerns as the expansion of monoculture plantations is a major driver of deforestation – undermining Indigenous Peoples’ land rights and damaging the environment through pesticides usage, water stress and biodiversity loss. In addition – according to the Consultative Group on International Agricultural Research (CGIAR) – at the most, plantations store only one-fifth of carbon compared to untouched primary forests.

There is conserted lobbying by both some governments and conservation-based NGOs for REDD mechanisms through the UNFCCC to implement carbon trading for forests, instead of a fund-based approach to community-based forest management, let alone other reliable non-money-based approaches such as strengthening land rights, leaving fossil fuels in the ground and bans on deforestation.

The central idea of carbon trading for forests is that developing countries reduce their deforestation rates and this will allow them to sell the carbon stored in their forests to the North. This allows Northern countries and corporations to buy their way out of emission reductions and continue business-as-usual polluting. It is also based on a false premise that the inactive underground carbon cycles (coal, oil and gas in stable underground reservoirs) and the active land-based carbon cycles are the same. This false assumption enables the protection of one carbon cycle to offset the exploitation of the other.

So at best this should theoretically lead to zero global emission reductions if it were not for the fact that the different carbon cycles vary hugely, making it impossible to actually verify whether or not emissions have actually been reduced.

If our last remaining forests are to be included in carbon markets, the question naturally arises of who owns those trees and what happens to those forest-dwelling communities that have depended on them for generations? There are huge risks for a dramatic expansion of exclusionary models of forest conservation that violate Indigenous Peoples and traditional communities’ customary and human rights on a global scale.

The World Bank is at the helm in the trading of forest carbon credits and its portfolio is rapidly expanding with its Forest Carbon Partnership Facility (FCPF) which was launched amidst protests at climate talks in Bali last December. At the G8 in Japan, the Bank’s multi-billion dollar climate investment funds – which include carbon finance for forests – are being formally launched and these funds are already casting a dark shadow over United Nations climate negotiations.(8)

The World Bank’s conflict of interests is all too apparent since the majority of its carbon finance portfolio has been channeled toward polluting industries and it has even been supporting industrial logging. (9) The Bank must be excluded from the UN talks or the integrity of a post-2012 Kyoto agreement will be severely undermined.

In a similar vein to carbon trading for forests, trade liberalisation is also being promoted as a solution to the climate crisis when in reality it also threatens communities that are highly vulnerable to the impacts of climate change by accelerating the commodification of their natural resources. Hundreds of millions of people rely on the world’s last remaining forests and are dependent on them for their livelihoods, medicine and food.

The European Commission has stated that: “Trade liberalisation can accentuate negative sustainability trends unless appropriate forest governance systems are in place and enforced”. Such systems are clearly not operating in many countries and further liberalisation should therefore not take place.

The report also points out that in African, Caribbean and Pacific (ACP) countries such as the Congo Basin countries and Papua New Guinea, possible negative impacts on biodiversity can be irreversible. A United Nations Environment Program study reinforces by highlighting how trade liberalisation in Tanzania led to a rapid increase in deforestation as exports for forest-based products rose dramatically.(10)

Another of the EU’s impact assessment states that Central African countries should consider the environmental costs of trade liberalisation such as increased deforestation resulting from timber exports and environmental degradation linked to oil exploration.(11)

The liberalisation of energy markets – a key demand by the European Commission – is also going to have obvious climate change impacts and undermine community-based campaigns to leave fossil fuels in the ground.

The European Union is so often portrayed internationally as a force for good – a enlightened voice of reason in a world dominated by an intransigent and deeply unpopular Washington administration. Yet often below the media radar and away from the gaze of the general public, the EU has been bullying 77 ACP countries to sign unfair trade deals misnamed Economic Partnership Agreements (EPAs).

Leaders of ACP Ministers issued a joint statement deploring “the enormous pressure that has been brought to bear on the ACP States by the European Commission to initial the interim trade arrangements, contrary to the spirit of the ACP-EU partnership”. The Pacific’s lead negotiator, Jo Keil has slammed the EC’s aggressive bully-boy approach to the negotiations stating: “None of that will ever happen again to the Pacific to suffer that indignity that was forced upon us by Commissioner Mandelson”.(12)

The Pacific region is holding out, the Caribbean region has agreed to an EPA and many African countries have relented to the EU’s bullying. A Nambian diplomat reportedly lamented: ‘‘The pressure was too much. …. Bully tactics are used with the threat ‘you either sign or you don’t have the market.” (13)

Millions of peasant farmers and fisherfolk are facing the combined threat of climate change and unfair trade impacts. In Senegal, trade liberalisation exposed its waters to heavily subsidised fleets. Ecologists claim that some 11,000 tonnes of fish caught in Senegalese waters are discarded annually by EU trawlers. UN studies show that in Mauritania fishing stocks have been devastated largely as a result of trade liberalisation with certain species such, as sawfish, disappearing altogether.(14)

Studies by the United Nations Environmental Programme highlight that further trade liberalisation threatens small-scale rice farmers and the environment in countries such as Senegal and Nigeria.(15)

Friends of the Earth Ghana has warned that EPAs are likely to undermine agricultural sectors. Rice and poultry farmers have already suffered from trade liberalisation and unfair competition from subsidised imports. An increase in cheap EU imports of frozen chicken and cheap rice would force rice farmers out of work and could lead to the collapse of the poultry industry.

Both carbon trading and trade liberalisation have appalling track records. The corporate takeover of the climate agenda – cloaked in philanthropic, planet-saving rhetoric and backed up with billions of dollars of financial support – poses new grave dangers that will be resisted from the corridors of international negotiations to communities struggling for survival on the ground.

A radical shift away from neo-liberalism must take place. We need to radically reduce our unsustainable consumption, secure peoples’ food sovereignty, leave fossil fuels in the ground, promote community-based forest conservation and invest in clean energy generated from the sun, wind and sea to help us cool the planet and attain sustainable societies. The North must repay its ecological debt to the South – it’s time for climate justice.

Joseph Zacune is Friends of the Earth International Climate and Energy Coordinator, joseph.zacune@foe.co.uk

NOTES
1. James Hansen and seven fellow scientists’ report is available at http://arxiv.org/abs/0804.1126 November 2007; See also David Spratt, Philip Sutton, “Climate Code Red” http://www.climatecodered.net February 2008
2. See Friends of the Earth International’s report “Climate Debt – Making historical responsibility part of the solution” http://www.foei.org/en/publications/pdfs/climatedebt.pdf December 2005
3. United Nations Environment Program, “Environment and cultural diversity” http://www.unep.org/GC/GC23/documents/GC23-INF23.pdf November 2004
4. United Nations Declaration on the Right to Development: adopted by General Assembly resolution 41/128 of 4 December 1986 http://www.unhchr.ch/html/menu3/b/74.htm
5. Adopted by General Assembly Resolution 61/295 on 13 September 2007 http://www.un.org/esa/socdev/unpfii/en/drip.html
6. Estebancio Castro Diaz, Global Forest Coalition “Climate Change, Forest Conservation and Indigenous Peoples’ Rights, April 2008..
7. "All Parties, taking into account their common but differentiated responsibilities and their specific national and regional development priorities, objectives and circumstances, shall: ...Promote sustainable management, and promote and cooperate in the conservation and enhancement, as appropriate, of sinks and reservoirs of all greenhouse gases not controlled by the Montreal Protocol, including ..., forests ...” (UNFCCC Article 4.1 d).
"The developed country Parties and other developed Parties included in Annex II shall provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties in complying with their obligations under Article 12, paragraph 1. They shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures that are covered by paragraph 1 of this Article and that are agreed between a developing country Party and the international entity or entities referred to in Article 11, in accordance with that Article. The implementation of these commitments shall take into account the need for adequacy and predictability in the flow of funds and the importance of appropriate burden sharing among the developed country Parties.“ (UNFCCC Article 4.3)
8. Forest Peoples Programme (FPP) “The Forest Carbon Partnership Facility: Facilitating the weakening of indigenous peoples’ rights to lands and resources.” February 2008; “Seeing RED – ‘Avoided deforestation’ and the rights of Indigenous Peoples and local communities” June 2007. Available at: www.forestpeoples.org/documents/forest_issues/bases/forest_issues.shtml SEEN “World Bank Climate Profiteer” http://www.ips-dc.org/reports/#292 April 2008 See information on the World Bank climate investment funds http://action.foe.org/t/3877/content.jsp?content_KEY=4176
9. SEEN “World Bank Climate Profiteer” http://www.ips-dc.org/reports/#292 April 2008 http://www.rainforestfoundationuk.org/s-Stop%20the%20carve%20up%20of%20t...
10. The Institute for Development Policies and Management University of Manchester, Savcor Indufor Oy “Sustainability Impact Assessment of Proposed WTO Negotiations: Final Final Report for the Forest Sector Study”, 2005 www.sia-trade.org/wto/Phase3B/Reports/ForestFR19June05.pdf United Nations Environment Program, “Economic Reforms, Trade Liberalization and the Environment: A Synthesis of UNEP Country Projects”, November 2001 www.unep.ch/etu/doha/pdfs/papers/synthesisround2.pdf
11. PricewaterhouseCoopers, “Sustainability Impact Assessment (SIA) of the EU-ACP Economic Partnership Agreements: Financial Services in Central Africa,” 11 September 2006 www.siagcc. org/acp/download/sia_fs_cemac_finalreport_11sept2006.pdf
12. http://www.acp-eu-trade.org/news/news_detail.php?5846
13. http://ipsnews.net/news.asp?idnews=40486
14. United Nations Environment Programme, “Economic Reforms, Trade Liberalization and the Environment: a Synthesis of UNEP Country Projects”, 2001 www.unep.ch/etu/doha/ United Nations Environment Programme, “UNEP briefs on economics, trade and sustainable development”, May 2002 www.unep.ch/etu/publications/UNEP_Fisheries.pdf
15. http://www.unep.ch/etb/publications/intAssessment/RapSynRice.pdf

Don't be fooled by the climate change bill.

JamieSW — Thu, 24 Jul 2008 14:20:42 +0000

For the past two years I have been fretting over a mystery. Though Labour seems to have done everything possible to ensure that it stays out of office, there remains a possibility that it might form another government at some point between now and 2050. This means that its climate change bill, which will become law in the autumn, could come back to haunt it. Despite its evident flaws, this is radical and unprecedented legislation. It imposes a legal obligation on future governments to cut carbon dioxide pollution by 60% or more by 2050, with binding interim targets every five years.

The government has some good climate policies. It also has some bleeding disastrous ones, which appear to commit the United Kingdom to high carbon pollution for the entire period covered by the bill. A future Labour government would find itself snared by its own current policies. Surely it wouldn’t be foolish enough to set such a trap for itself?

One policy alone seems to doom future governments to prosecution: the planned doubling of the capacity of the UK’s airports by 2030. Using the Department for Transport’s projections, I estimate that by 2050 aeroplanes will account for 91% of all the greenhouse gases the country should be producing. Under the less optimistic figures published by Defra, the environment department, the proportion rises to 258% The calculations are explained here: http://www.monbiot.com/archives/2006/12/19/preparing-for-take-off/.

Until now this hasn’t been a problem: the government has refused to include aircraft pollution in the 2050 target. But following an amendment in the Lords, the draft bill imposes a duty on the government either to include it or to explain to parliament why it hasn’t done so, within five years Draft Climate Change Bill, as amended in public bill committee, part 29. http://www.publications.parliament.uk/pa/cm200708/cmbills/129/08129.11-17.html#D002b. The government claims that it might not be possible to add these gases to the UK’s carbon budget because, “in the absence of an internationally agreed methodology”, no one knows how to calculate what proportion of this pollution belongs to us Defra, 15th July 2008. Climate Change Bill: Update following House of Commons Committee Stage. http://www.defra.gov.uk/environment/climatechange/uk/legislation/pdf/080715-CC-Billupdate.pdf.

It’s a knotty problem, isn’t it? If you were the government and you knew that 67% of the passengers using UK airports were residents of this country Sally Cairns and Carey Newson, September 2006. Predict and Decide: aviation, climate change and UK policy. Environmental Change Institute, University of Oxford, p8.
http://www.eci.ox.ac.uk/research/energy/downloads/predictanddecide.pdf, could you work out what proportion of aircraft emissions should be counted in the UK’s carbon budget? No? Me neither. Wouldn’t know where to begin.

This ridiculous excuse can’t be sustained for much longer. At some point aircraft gases will have to be included in the carbon target. Throw in the government’s road-building programme and its intention to approve new coal-burning power plants and you can see that it has a problem.

The only factor now holding down carbon emissions is the price of energy. They fell by 2% last year, and the government admits that this “was largely explicable in terms of price relativities.” Defra, July 2008. UK Climate Change Programme. Annual Report to Parliament, July 2008, p17. http://www.defra.gov.uk/environment/climatechange/uk/ukccp/pdf/ukccp-ann-report-july08.pdf In other words, it has again become cheaper to burn natural gas in power stations than to burn coal, while the cost of oil has encouraged people to drive less. The 2% reduction means that the UK’s carbon budget is now a grand total of 0.8% smaller than it was in 1997The figure for 1997 was 548.1MtCO2. The provisional figure for 2007 is 543.7 MtCO2. See Table 2, Defra, July 2008, ibid.. The government can post a 16% cut in greenhouse gases since 1990 only because of the accidental reductions made during the dash for gas under the Tories and the sharp reduction in methane and nitrous oxide from rubbish dumps and industry. Neither of these cuts can be repeated.

But this doesn’t even begin to describe the government’s problem. Its new climate change report contains a tantalising figure. It is expressed in such a back-handed way that you have to perform half a dozen small calculations to discover what it means. The report boasts that even when emissions in countries exporting goods to the UK are taken into account, “the total annual reduction of UK greenhouse gas emissions since 1990 was around 240 million tonnes of carbon dioxide equivalent [MtCO2eq] below business as usual”.Defra, July 2008. UK Climate Change Programme. Annual Report to Parliament, July 2008, p18. http://www.defra.gov.uk/environment/climatechange/uk/ukccp/pdf/ukccp-ann-report-july08.pdf The government says that “business as usual” would have led to an increase of 40% in emissions since 1990. This gives us a figure of 1079MtCO2eqThe 1990 figure was 770.8MtCO2eq. Table 2, Defra, July 2008, ibid.. Subtract 240 from 1079 and you get 839, or 187 MtCO2 eq above current emissionsThe latest figure (2006) for all ggs is 652.3 MtCO2eq. Table 2, Defra, July 2008, ibid.. This means that instead of declining by 16% since 1990, as the government insists, the greenhouse gases for which the UK is responsible have risen by 9%.

When I finished this sum I sat still for quite a long time. The UK’s entire climate change programme is based on a statistical artefact. The only reason our pollution appears to have declined is that we have outsourced our emissions. A fair account of our carbon emissions would include those we import minus those we export: a balance that can only worsen in a post-industrial economy.

So how can the government reconcile its energy policies with future political hazard? Well the mystery has at last been solved. The key to the puzzle is found in a minor briefing note just published by Defra. It explains that, during the latest stage of the bill, the government “remov[ed] the quantified limit on the use of internationally traded credits in meeting the UK’s targets”Defra, 15th July 2008, ibid.. In other words we could buy the entire cut from other countries.

Given that we are outsourcing some of our greenhouse gases, you might think it makes sense to outsource our carbon cuts as well. But there are three problems. The first is that we are exporting emissions that are difficult to address and importing, through carbon trading, the easiest and cheapest cuts.

The second is that while the emissions we export are certain and verifiable, the cuts we buy through carbon credits are often fraudulent. For example, as the writer Oliver Tickell documents, 96% of the carbon credits from hydroelectric dam construction were issued after construction had begun: the dams would have been built without the carbon market, so no additional cuts have been achievedOliver Tickell, forthcoming. Kyoto2: how to manage the global greenhouse. Zed Books, London.. Around 30% of all carbon credits comes from the sale of trifluoromethane cuts by Chinese and Indian companies making refrigeration gases. Many of them are still producing this pollutant only because they make so much money from cleaning it up: the carbon market pays them 47 times more for these cuts than the gas costs to removeibid..

Behind these problems lurks a much greater one, which is mathematically impossible to resolve. You can trade your way out of trouble when the cut you are trying to achieve is a small one. But when the global cut required to prevent two degrees of warming is 60 or 80 or 90%, then every rich nation must reduce its emissions by roughly the same amount. Otherwise half the world would have to buy credits equivalent to 180% of the emissions produced by the other half.

The government will have to impose some kind of cap on carbon trading. But I bet it will be set high enough to cover any failures in domestic policy, as measured by the rigged accounting methods civil servants use. This means that successive governments will have no legal incentive to change their energy policies. The carbon trading provision torpedoes the useful content of the entire bill.

But at least the mystery has been solved, and it will no longer keep me awake at night. Now I can focus on the real nightmares.

A Just Transition?

Ellie Keen — Sun, 20 Jul 2008 12:38:17 +0000

In the past few months, outbreaks of industrial unrest and protest have been occurring throughout Europe in the industries most affected by the rising price of oil. Starting with Grangemouth refinery, Unite workers in went on strike over reduction in pension rights. Workers in haulage companies delivering to petrol forecourts followed in a dispute over pay. More recently we have seen the protests of the haulage companies themselves demanding special reductions in tax on fuel – by the time this article goes to press, we will know whether Gordon Brown has held his nerve on that. In France, railway workers and fishermen have been involved in industrial action and in Spain public transport workers have likewise struck over the impact of the rising price of fuel. Meanwhile, oil companies continue to make record profits. These are signs of things to come. At the end of June, the list of oil companies invited to tender for lucrative contracts in Iraq was published. On the same day, the price of oil increased to $140 a barrel, the highest ever recorded. Each month for the past six months, the price of oil has been the highest on record. As we approach peak oil, when supply cannot meet demand, the price of oil is spiralling upwards, and the distribution of the costs and benefits of this are profoundly unequal and increasingly contested. Ten years ago, the economist James O’Connor described how states treat oil as not just a commodity but as an extension of state security, backed by military apparatus.

These are elements of the supply side of the oil industry. If we look at the waste stream, the carbon dioxide emissions which are accumulating in the atmosphere and disrupting the climate, we are seeing increasing frequencies in the occurrence of cyclones, hurricanes, floods, although the debate often takes an apparently more arcane, esoteric form. Is it possible for the climate to withstand a carbon dioxide concentration of 450 parts per million, or will it be necessary to reduce to 350 ppm or less? Just how disrupted will the climate be with each 0.1 degree Celsius and at what point do the changes become irreversible? Essential though these debates are – and each scientific report which hits the public domain points towards more worrying scenarios – it should not be forgotten that two thirds of the excess carbon dioxide in the atmosphere originates from the G7 countries, with currently 13 per cent of the world’s population. There is no doubt that there is a crisis, and that the rich countries need to cut oil consumption almost to nothing.

Currently, the principal mechanism for cutting carbon dioxide emissions is carbon trading, which essentially entails enclosure of the last remaining commons – the carbon absorption capacity of the atmosphere – by allocating property rights to those who are already destroying it. This is none other than a neoliberal extension of commodification of the atmosphere, whilst shifting costs onto the poorest who are dispossessed by ‘green development projects’. Ideological justification is provided by individualising responsibility as a form of consumer choice. Climate disaster is happening because western consumers made the wrong choices! Whatever happens to the climate, the interests of global capital cannot be jeopardised.

How are we going to get out of this mess? In short, we don’t know, but the solution must be radical, it must be socially just and it must challenge the interests of big business. We can transform this oil-drenched economy *and* overturn poverty *and* have decent jobs. Potential solutions are emerging in debates across the left, but a solution must emerge from social processes more than ideas. As we stand in Scotland, the only party in Parliament which is opposed to the interests of big business is the Green Party whose support comes, more or less, from the professional middle classes who support the NGOs and the ‘new’ social movements of which they are part. The most directly affected working class movements are challenging the oil companies, but in terms that ignore the climate crisis that we are facing. The other left parties are recognising the ecological challenge, and despite their current relative weakness, remain active in community and working class struggles. We need the collective knowledge of all political movements critical of or operating out with the neoliberal framework of economic growth, all groups whose interests are being actively damaged, in Parliament, in communities, in the social movements and in the trade unions. Only by working towards some kind of bloc will we shift the hegemony sufficiently to implement change. We need such a broad alliance like never before if we are to work out a just transition to a sustainable solution.

Justin Kenrick, in SLR earlier this year, argued for a transitional alliance to tackle climate change. This has been interpreted in different ways and stimulated an important debate, generating significant connections across the left as well as raising fears. As a result of these debates, a conference is being organised by activists from across the left and green movements to explore how we can move forward. None of the parties which might form a government in the foreseeable future will implement a radical changes needed on their own, and to imagine that they can be persuaded otherwise before the damage is done is unfortunately a false dream. The damage is already well underway, and it’s time for a new dream.

Conference: transition to tackle climate change, Edinburgh, 18th – 19th October 2008

Eurig Scandrett is a member of the Scottish Green Party and Democratic Left Scotland

Offset Standard is Off Target

Ellie Keen — Thu, 03 Apr 2008 21:37:23 +0000

Offset companies across the UK were petulantly stamping their carbon footprints recently following environment minister Hilary Benn’s announcement of a new ‘kitemark’ scheme for the sector. Voluntary offsets promise consumers the chance to pay extra to assuage their guilt when they fly or engage in other carbon-intensive activities. But they have been heavily criticised for making bogus claims about emissions reductions, and for funding projects that adversely impact upon communities in the global South.

In a move designed to weed out the carbon cowboys, Benn’s proposal is that only offset providers using the Kyoto Protocol’s ‘clean development mechanism’ (CDM) will qualify for the government’s seal of approval. This currently excludes all but a handful of offset companies in the UK. Most of the industry has been delegitimised at a single stroke, including such outfits as Climate Care and the Carbon Neutral Company, who have always taken pains to portray themselves as the good apples in the bad bunch.

That’s the good news. The bad news is that Benn’s measure is only temporary. In response, eight of the largest offset providers in the UK are forming an industry coalition to create their own ‘self-regulating’ standards that would replace the government’s best practice code.

There is even worse news when you look at what the CDM entails. As with voluntary offsets, it is designed to shift the burden of cutting emissions onto poorer countries in the South. A range of research has shown that the same problems of corruption, bogus emissions reductions and harm to communities occur within the CDM as with the voluntary offset market.

To take just one recent example, the Oxford-based carbon broker, Ecosecurities, recently sold CDM credits generated by a wind farm in Maharashtra, India. Fantastic, you might think, this is exactly what the carbon market should be all about, promoting renewable energy in Southern countries. A visit to the project in 2007 revealed a different picture. The gigantic wind farm had been built on traditional grazing grounds and provided no energy to the villagers themselves. Those who resisted met with repression.

The company responsible for the project, Tata Motors, also has an appalling environmental and human rights record in India. When people buy these credits, they are putting money in the pockets of those responsible for violent industrial expansion and land appropriation on the other side of the world.

There’s also the thorny issue of additionality. Carbon offsets are supposed to provide investment for emissions reduction projects that wouldn’t otherwise have happened. If not, they are simply selling ‘hot air’.

But a 2006 investigation in India, conducted by an adviser to the CDM executive board (which regulates the scheme), conservatively estimated that one-third of all projects failed to be ‘additional’. An extensive study of CDM hydro-electricity projects, meanwhile, found that almost all such projects were already under construction when they applied for carbon financing – suggesting that ‘additionality’ in this sector is in very large part a fiction.

There is a basic catch-22 with offsets and regulation. The more you regulate, the more expensive it becomes to enter the market, so the more you push it into the hands of the big corporate bad guys with enough money to make it work for them. The less you regulate, the greater the openings for chancers who claim that they’re generating offsets from any old nonsensical scheme.

Establishing a code of best practice does, at least, acknowledge the serious problems with existing offset schemes. But it also reinforces a false dichotomy of good versus bad offsets that distracts attention from their more fundamental problems. No number of regulatory frameworks or best practice codes can resolve the fact that offsets are snake oil, a nonsensical commodity that reduces the problem of tackling climate change to a short-sighted cost-benefit analysis that foists projects on communities ‘over there’, irrespective of the social costs, and is cheaper than making political and social changes here.

Kevin Smith is a researcher at Carbon Trade Watch (www.carbontradewatch.org), a project of the Transnational Institute, and author of the forthcoming Hot Air and Snake Oil: The Top Ten Carbon Offset Upsets

Carbon Trading?

Ellie Keen — Sun, 28 Oct 2007 23:54:35 +0000

Imagine a football league where, if a team has a run of bad results, it could simply buy points from another club.

So poor tottering Tottenham, for instance, instead of spending £16m on a misfiring striker, could use the dosh to procure points from Manchester City, saving Sven-Goran Eriksson from the dangers of vertigo in the process.

Conversely, an over-achieving team like Bristol City could sell points to help, say, either or both of the Sheffield clubs avoid an ignominious drop.

Promotion and relegation could be decided not by performance on the pitch but by who will do business with you, and on what terms.

Unfair? Unsportsmanlike? Open to abuse? Welcome to the world of carbon trading, where just such a system operates in the exchange of carbon credits – a scheme which compares unfavourably with bundling up US sub-prime mortgage loans and flogging them on to high street banks.

And has it brought about a reduction in CO2 emissions? You’ll see Accrington Stanley winning the Premier League first.

This is a tad worrying, because we really do need a system that drives down energy use and moves us towards an economy and communities that are genuinely sustainable.

News this week that ministers are considering abandoning the European renewable energy target (20% from renewable sources by 2020) is still more disconcerting.

Apparently it will cost about £4bn a year for us to get to 9%. Has Gordon Brown not heard the phrase ‘invest to save’?

We live in a strangely dysfunctional world where we’re happy to applaud Al Gore to the rafters but do so little in response to what we know about climate change that we’ll struggle to offset the energy consumed in the awareness-raising.

Last week Forum for the Future issued a league table of sustainable cities in the UK.

This is good news (especially if you live in Brighton; less so if your home is in Hull) but unfortunately the forum can’t offer meaningful rewards for improvement.

It wouldn’t take much imagination, though, to tweak the local government finance system to provide real incentives to progress towards sustainability.

Councils that promote and subsidise large-scale domestic micro-generation could win additional freedoms or funds. Planners can set tougher targets for zero-carbon homes.

The opportunities are there: has central or local government the will or the nous to grasp them?

Carbon Trading: The Limits of Free-Market Logic

Tim Holmes — Sat, 29 Sep 2007 15:02:25 +0000

If, as their proponents claim, carbon markets are wonderful tools for bringing about emissions reductions and provide economic support for clean technologies in the global south, then we should ask one question: why have they been met with a mounting chorus of criticism from civil-society organisations, social movements and journalists around the world?

Plans are being made, through processes like the G8+5 Climate Dialogue for countries like China (ie countries currently without commitments under the Kyoto Protocol) to adopt carbon trading as part of their climate policy, and there needs to be an assessment of whether such schemes really work in reducing atmospheric carbon – or if they are simply a means for polluting industries to profitably avoid the issue of making emissions cuts.

Cap and trade

The free-market logic behind the scheme looks simple on paper. Countries taking part in “cap and trade” schemes like the European Union Emissions Trading Scheme (EU-ETS) have a limit set on the amount of carbon they can emit in a given time period (the “cap”). This allotted amount of carbon is carved up and allocated between different industrial locations in the country. If, for example, a cement factory goes over its allocated portion of carbon emissions, it has to purchase spare emissions from another market participant, for example, a power station that has emitted less than its allocation, and can therefore sell profitably sell them on (the “trade”).

The problem lies in the fact that carbon trading is designed with the express purpose of providing an opportunity for rich countries to delay making costly, structural changes towards low-carbon technologies. This isn’t a malfunction of the market or an unexpected by-product: this is what the market was designed to do. The economist John Kay wrote in the Financial Times: “when a market is created through political action rather than emerging spontaneously from the needs of buyers and sellers, business will seek to influence market design for commercial advantage.” In terms of climate change and carbon trading, the “commercial advantage” (at least in the short term) lies in avoiding the costly structural changes, and industry has influenced every stage of the design and implementation of the carbon market to this end.

Businesses and industries in the global north have avoided making these infrastructural changes by ensuring that the price of carbon permits is kept absurdly low. It is much cheaper for industry to purchase cheap carbon credits to make up any emissions short-falls than to implement the technologies that would actually bring about real emissions reductions at source.

The low price of carbon permits was ensured in the first round of the EU-ETS by governments handing many more emissions permits to industry than was necessary; the majority of industrial locations had more emissions permits than they needed. When news of this massive over-allocation was revealed, it caused the price of carbon to drop dramatically. Economists estimate that carbon permits should be priced at around 30 to 50 euros per tonne in order to create sufficient incentives for low-carbon technologies. Towards the end of the first round of the EU-ETS the price of permits was regularly dipping below one euro per tonne.

Market enthusiasts argue that the “cap” will be tightened in the second round, causing the price of carbon to rise. But in order to prevent this happening, business has lobbied for a means of importing more cheap credits into the system, generated in countries like China, through the Clean Development Mechanism.

Clean development?

Instead of trading with other market participants in Europe, another option for our cement factory would be to purchase “carbon credits” that have been generated outside of the trading scheme, through a project in a developing country that supposedly reduces or avoids emissions. An example would be a hydro-electric power station in China that has sold its supposed emissions reductions to companies from rich countries as part of the Clean Development Mechanism (CDM). China has been the world leader in this market, generating some 60% of all CDM credits in 2006.

The CDM has had some bad publicity in the last six months. An article in The Guardian newspaper in June 2007, said: “[the CDM] has been contaminated by gross incompetence, rule-breaking and possible fraud by companies in the developing world, according to UN paperwork, an unpublished expert report and alarming feedback from projects on the ground.”

Despite the regulatory framework that surrounds the CDM, there is both the incentive and the opportunity for project developers to distort key information, so as to make a project appear more effective and generate more credits – or gloss over any local resistance to the project.

For example, the principle of “additionality” is a pre-requisite for a project to qualify for CDM status: it has to be proved that the project would not have taken place without the funding provided through the CDM; any climate benefits should be additional as a result of the funding. Otherwise, unscrupulous operators could simply claim carbon funding for projects that would have taken place anyway, meaning industries in rich countries could justify further pollution on the false premise of being responsible for emissions reductions elsewhere.

However, many CDM projects under consideration in China involve generating hydro-electricity: there are 248 currently in the pipeline. There are strong grounds to be extremely sceptical over whether these are genuinely additional, given that such projects are very common in China, and have been actively promoted by the government. The question arises over whether they would have been happening had it not been for CDM funding. In 2005, the International Rivers Network submitted a comment to the CDM panel in reference to the Xiaogushan Large Hydroelectric Project in northwest China’s Gansu province, which pointed out that the application for CDM funding was submitted two years after the construction of the dam had begun, and that “project documentation from the Asian Development Bank clearly states that Xiaogushan was the least–cost generation option for Gansu and that revenue from CDM credits was irrelevant to the decision to go ahead with the project.”

It is not well documented whether there is local support for the various hydro-electric projects in China that are being promoted through the CDM, which as a pre-requisite should bring developmental benefits to local communities. Many of the corporate benefactors of CDM money in other countries are the target of sustained local resistance from communities who have to endure the often life-threatening impacts of intensive, industrial pollution.

In 2005, about 10,000 people from social movements, community groups and civil society organisations mobilised in Chhattisgarh, India, to protest the environmental public hearing held for the expansion of Jindal Steel and Power Limited (JSPL) sponge iron plants in the district. The production of sponge iron (an impure form of the metal) is notoriously dirty, and companies involved have been accused of land-grabbing, as well as causing intensive air, soil and water pollution. JSPL runs the largest sponge-iron plant in the world, which is spread over 320 hectares on what used to be the thriving, agricultural village of Patrapali. This plant alone has four separate CDM projects, generating millions of tonnes of supposed carbon reductions that could be imported into the EU-ETS. The inhabitants of three surrounding villages that would be engulfed are resisting a proposed 20 billion rupee (around US$412 million) expansion. In this case, the CDM is not only providing financial assistance to JSPL in making the expansion, but also providing them with “green” credibility by putting them at the forefront of the emerging carbon market.

The head of China’s environmental agency, Zhou Shengxian recently attributed the rise in social unrest across the country to pollution scandals and the degradation of the environment. An article in the Guardian newspaper said that his comments “underscore the frustration of state mandarins at local government officials who ignore environmental standards in order to attract investment, jobs and bribes.” Given such circumstances, it is highly possible that the CDM will provide financial support to the sort of environmentally irresponsible power and chemical plants that are increasingly becoming the target of community protest in China.

Pollution and power

The largest share of CDM credits worldwide (30%) has been generated by the destruction of HFC-23. This potent greenhouse gas is created by the manufacture of refrigerant gases. A study in the February 2007 article of Nature showed that the value of these credits at current carbon prices was 4.7 billion euros. Not only was this twice the value of the refrigerant gases themselves, but it was also estimated that the cost of implementing the necessary technology to capture and destroy the HFC-23 was less than 100 million euros: something in the region of 4.6 billion euros was being generated in profit for the owners of the plants and the project brokers. In an article in the Sunday Times, it was reported that two Chinese companies were set to make around US$1 billion in 2007 alone as a result of CDM money given for the destruction of HFC-23.

This enormous sum of money generated by these Kyoto-style trading schemes has not gone to the companies and communities who are taking action on clean energy and energy-reduction projects, but rather to big, industrial polluters who are then at liberty to reinvest the profits into the expansion of their operations. Ashish Bharat Ram, the managing director of an Indian company that reported a profit of 87 million euros from the destruction of HFC-23 in 2006 and 2007, told the Economic Times that: “Strong income from carbon trading strengthened us financially, and now we are expanding into areas related to our core strength of chemical and technical textiles business.”

The structure of the CDM is such that it is usually an option reserved for large companies who can provide the capital needed not only to implement the project, but also to go through the long process of accreditation and certification, with all the attendant expenses of carbon consultants, third-party verifiers, ongoing project monitoring and so forth. Larry Lohmann argues in his book Carbon Trading – A Critical Conversation on Climate Change, Privatisation and Power that this “reinforces a system in which, ironically, the main entities recognized as being capable of making ‘emissions reductions’ are the corporations most committed to a fossil-fuel burning future… while indigenous communities, environmental movements and ordinary people acting more constructively to tackle climate change are tacitly excluded, their creativity unrecognized, and their claims suppressed.”

It seems that the only people who are benefiting from the carbon market and CDM projects are the polluting corporations that are involved in both Europe and the global South, as well as the new class of handsomely-salaried carbon technocrats and brokers, which has sprung up to service the needs of the market. There is an urgent need to recognise that the market’s fixation on short-term profit maximisation is not an appropriate instrument to induce the large-scale and costly infrastructural changes that need to take place in all countries in the transition to low-carbon economies.

Kevin Smith is a London-based researcher with Carbon Trade Watch, which is a project of the Transnational Institute. He is the author of the reportThe Carbon Neutral Myth – Offset Indulgences for your Climate Sins and the co-author of Hoodwinked in the Hothouse – the G8, Climate Change and Free Market Environmentalism.

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